I know how to fix the core supply crisis that has hit the recycled pallet market in the United States. Have I gotten your attention? Before I discuss the solution, let me explain what stands in the way.
Over the years, I have traveled to hundreds of pallet plants. And almost every plant, especially the recycling facilities, has a land of misfit toys, a place where all the odd-sized or junk pallets go. Some companies process these efficiently. But most do not. Sometimes there is Mount Trashmore, a huge pile of scraps, pallets and wood junk. This is not only a fire hazard. It is an eye sore, making your company look like a scrap dealer instead of a professional packaging, recycling or logistics operation. The overall appearance should be enough to push you to act. But it is a simple situation of out of sight, out of mind. You are too busy dealing with finding pallets and repairing them to bother.
These piles of pallets take up valuable real estate, clutter your operation and create a mindset that could destroy your company. If you allow a junky appearance, your employees will pick up on that attitude, and it could impact their attention to detail and focus on quality. While this doesn’t happen all the time, there is a reason why most quality improvement programs have a component of house cleaning as a core principle. A lax attitude about your workspace and your pallet yard likely will carry over to other aspects of your pallet operation.
As we end 2015, now is the time to make New Year’s resolutions. While I generally think those are a waste of time, maybe we fail because we try to take on too much at once. Instead of coming up with a long list of items to fix, what if more pallet and lumber companies decided to make 2016, the year to defeat clutter once and for all? What if 2016 became the time when you turned wood scrap and piles of junk pallets into usable lumber to produce combo pallets? What if you turned small pieces into something useful or allowed others to do the same by selling recycled pallet lumber for home improvement or furniture projects?
I challenge you to go walk through your facility sometime today. Take pictures of all the piles of junk pallets or wood scraps. How can this material be repurposed into something useful? Can you turn odd-sized or junk pallets into recycled boards for producing more pallets? The longer you allow material to stay in your yard, the more it deteriorates, and the less useful it becomes. But if you can dismantle broken pallets and turn them into usable lumber, you can produce more combo pallets, which will be cheaper than new ones.
As cores become more expensive, the ability to turn those old junk pallets into combos will be like finding buried treasure. And it will add more used pallets to the market. I believe one of the problems is that recyclers have been waiting for new pallet manufacturers to fix their supply problems.
And we believe that producing quality combo pallets can help alleviate some of the core supply problems by augmenting what new pallet producers manufacture. Recyclers can fix some of their own supply problems. But they have to turn scrap wood into gold. This requires a concerted effort to clean up clutter, dismantle pallets and produce something useful.
You may have to add some equipment or personnel, but I believe this will be worth it in the end. And I think that combo or re-manufactured pallets will be attractive to many customers as the core supply tightens. If you have to bid ludicrous prices for cores, then you will have to charge high prices for used pallets. Many pallet recyclers are reporting record profits as used pallet prices have spiked across the country. But this is a double edged sword. Higher profits is good, but it also could make white-wood pallets less competitive in the future to other options, especially rental, if the trend continues.
Turning clutter into combos helps solve that problem. And it puts the recycler in control of the market again, not the core suppliers or the few large national service providers.
Some pallet companies tell me the pallet junk pile or odd-sizes are not a priority. But it should be. They tell me that their system is not setup efficiently to process this material as it comes into the yard. But that seems more like an excuse and an opportunity than a legitimate reason for not doing a better job. This clutter also raises fire and insurance risks. And those reasons alone might be enough to act.
A number of pallet recyclers have torn down junk pallets and sold off the recycled lumber to local home improvement stores or hobbyists. The “recycled look” is in right now, even my church used recycled pallet lumber in its foyer to provide the right setting for visitors. If I was in the recycled pallet business, you better bet I would look into setting up a small website dedicated to this concept to get rid of scrap material I couldn’t turn into combos.
Another reason I have heard that recyclers don’t do something about the clutter is that they don’t have the space in the plant or have a difficult time finding employees to tackle that task. So you have space on the yard to stores junk, but not enough space to put up a shed and run a few dismantlers and saws for a while?
And I understand the difficulty in finding labor to handle what is considered a non-essential task. But I believe in the future the companies that will be strongest are those who turn odd-sized and inferior quality pallets into combos.
Why am I so inspired about this topic? The reason is that the core crunch is getting worse. And we can’t wait for others to solve it. Also, I believe this move will help pallet recyclers better control their future. And right after a good year financially is the best time to take this risk.
One story that inspired me is the way that Pallet Express turned its scrap pallet problem into a positive by changing its processes and installing a new breakdown line from Industrial Resources. Material that used to go into the grinder is now turned into valuable pallets. The only way this happened was with a commitment to deal with everything as it comes in and not set things aside for the future. Pallet Express had to do this to keep up with a demanding customer. Read more about this transformation in the story on page 18.
Dealing with the clutter monster is the right thing to do, will you join me attacking clutter in 2016?
The entire staff of Pallet Enterprise wishes all of our readers, subscribers and vendors a merry Christmas and happy New Year in 2016. May this be the best year yet in the pallet industry!
